Unfortunately, the government isn't expected to pass any major
reforms between now and May 2014, and risk voter wrath.

What's worse, it's looking less likely that the incoming
government will have the clear majority needed to pass any
drastic, growth-stimulating reforms.

The latest opinion polls show the Congress party (which is
largely expected to push populist measures) and the Bharatiya
Janata Party (BJP - which is fiscally conservative and focused on
a development agenda) losing ground to a "third-front coalition."

The rise of the third front is bad news because the smaller
parties have their own agendas and are likely to push for reforms
centered on certain regions or communities, and are "unlikely to
have strong national policies," argues CLSA analyst Mahesh
Nandurkar.

"We see the chances of a weak leadership largely made up of
regional parties - each with their own agenda and incapable of
pursuing the bold reforms needed to kick-start India’s economy -
as the most probable scenario," writes Nandurkar. "This would
usher in a period of prolonged weak and patchy policy making."

And the make-up of the government is likely to moves markets.
From Nandurkar:

"Market reaction to electoral results can be strong and
immediate. Following 2009 election results, the market moved
rallied 17% over two days as the ruling Congress won a
stronger-than-expected mandate. After the 2004 result, the market
dropped 17% in two days as the right wing BJP lost unexpectedly
and a Congress coalition, supported by left-wing parties, came to
power. In both cases, Congress won the elections."

Nandurkar expects a third-front coalition to claim 200 - 250
seats. He expects both the BJP and Congress to "woo" the regional
parties and form alliances.

Of course political alliances are prone to change and the results
of the upcoming state elections in November and December will
also weigh on the 2104 elections. Moreover, there are 70 million
new voters, or 10% of the electorate, that will take part in the
2014 elections and this could also impact the outcome.

Earlier this year, the Financial Times reported that in a
"confidential note" the IMF was forced to make "a humbling
series of U-turns over its global economic assessment."At a time
when growth in developed markets is just beginning to return,
emerging markets have failed be the engine of growth that the
world had come to expect.

This is obviously key for foreign investors and businesses
looking to make a footprint in India.